Performance-Based Acquisition (PBA) (FAR Subpart 37.6)- formerly Performance-Based Contracting (PBC) – is a technique for structuring all aspects of an acquisition around the purpose and outcome desired as opposed to the process by which the work is to be performed.  It’s a concept based on reforms mandated to all Federal Agencies by the President’s Management Agenda, the Government Performance and Results Act of 1993, and the Federal Acquisition Streamlining Act of 1994.

Definition: Performance-Based Acquisition (PBA) is a method of preparing service contracts that emphasizes the service outcomes the Government would like the contractor to provide

Performance-Based Acquisition (PBA) Approach

The approach is the government no longer develops a prescriptive Statement of Work (SOW) dictating how the contractor will achieve project milestones. Instead, the government develops a Statement of Objectives (SOO) or Performance Work Statement (PWS) that describes the overall outputs and objectives but does not specify how to achieve those outputs. This approach allows private firms more flexibility to conduct operations in a manner that is cost-effective for their company while ensuring that required milestones are achieved.

What is a Performance Work Statement (PWS)

The Performance Work Statement (PWS) is a Statement of Work (SOW) for Performance-Based Acquisitions that clearly describes the contractor’s expected performance objectives and standards. When a contract is awarded, the PWS is legally binding between the contractor and the U.S. Government.

AcqNotes Tutorial

Performance-Based Service Contracting (PBSC)

Performance-based service contracting (PBSC) emphasizes that all aspects of acquisition be structured around the work’s purpose as opposed to how the work is to be performed or broad, imprecise statements of work that preclude an objective assessment of contractor performance.

Performance-Based Acquisition (PBA) Requirements

To be considered performance-based, an acquisition should contain, at a minimum, the following elements:

1. Statement of Objectives (SOO) / Performance Work Statement (PWS): Describes the requirement in terms of measurable outcomes rather than using prescriptive methods.
2. Measurable Performance Standards: To determine whether performance outcomes have been met, define what is considered acceptable performance.
3. Remedies: Procedures that address managing performance that does not meet performance standards. While not mandatory, incentives should be used, where appropriate, to encourage performance that will exceed performance standards. Remedies and incentives complement each other following elements.
4. Performance Assessment Plan: Describes how contractor performance will be measured and assessed against performance standards. (Quality Assurance Plan or Quality Assurance Surveillance Plan)

Objectives of a Performance-Based Acquisition (PBA)

By describing requirements in terms of performance outcomes, agencies can help achieve the following objectives:

• Maximize performance: Allows a contractor to deliver the required service by following its own best practices. Since the prime focus is on the end result, contractors can adjust their processes, as appropriate, through the contract’s life without the burden of contract modifications, provided that the delivered service (outcome) remains in accordance with the contract. Using incentives further motivates contractors to furnish the best performance they are capable of.
• Maximize competition and innovation: Encouraging innovation from the supplier base by using performance requirements maximizes opportunities for competitive alternatives instead of government-directed solutions. Since PBSA allows for greater innovation, it has the potential to attract a broader industry base.
• Encourage and promote the use of commercial services: The vast majority of service requirements are commercial. The use of FAR Part 12 (Acquisition of Commercial Items) procedures provides great benefits by minimizing the reporting burden and reducing the use of government-unique contract clauses and similar requirements, which can help attract a broader industry base.
• Shift in risk: Much of the risk is shifted from the government to industry since contractors become responsible for achieving the work statement’s objectives through their own best practices and processes. Agencies should consider this reality in determining the appropriate acquisition incentives.
• Achieve savings: Government and industry experience has demonstrated that using performance requirements results in cost savings.

Performance Work Statement (PWS) vs. Statement of Objective (SOO)

The SOO is a Government prepared document that provides the basic, high-level objectives of the acquisition. It is provided in the solicitation in lieu of a government-written Performance Work Statement. In this approach, the contractors’ proposals contain their statements of work and performance metrics and measures (which are based on their proposed solutions).  Using an SOO opens the acquisition to a wider range of potential solutions.

AcqLinks and References:

• Guidebook for Performance-Based Acquisitions
• Seven Steps to Performance-Based Acquisitions
• Website: FAR Subpart 37.6 “Performance-Based Acquisition”
• Website: GSA Performance-Based Acquisition Steps

Updated: 7/16/2023

Rank: G3.2